It’s been a bitter pill to swallow for the generation that grew up always trusting that the healthcare system was set up to help them get exactly what they needed, for little or no cost.

That bitter pill comes in the form of the realization that the purpose of the healthcare system is to maximize its profits. (Picture me smacking the palm of my hand against my forehead!) If they also happen to help a patient while making all that money, well, then, OK. That’s nice, too.

Yes – cynical – I know. But once we embrace the 30 thousand foot view of the healthcare system and money, we are in a better position to get what we need from it; to protect ourselves from the aspects that will cost us far more than they should.

But wait, you say… I’m on Medicare! I paid into the system all my working life! I don’t have to worry about the cost of my care!

To which I answer – NOT TRUE! Pull your head out of the sand! Because even if the government isn’t trying to make a profit from its citizens, it IS desperately trying to stem the bleed – the payouts to doctors, hospitals, testing labs, pharmaceutical companies, medical device companies… The government is drowning in costs for Medicare patients, so to the extent it can SAVE money – it’s looking for every way to do so. Therefore, more and more, Medicare is making changes to its payment system that pulls more from citizen pockets, taking less responsibility than it used to.

Case in point – and unrealized by too many hospitalized Medicare patients and their caregivers who do just don’t know how much a hospital stay might cost them; as in, tens of thousands of dollars… the concept of Observation Status.

This concept addresses whether or not the patient has been admitted to the hospital. Not all patients are formally admitted, even if they are moved to a room, stay overnight, and are tended to by the doctors and nurses of the hospital.

When patients are not formally admitted, they are considered to be under “observation status.” Medicare doesn’t pay for observation status. So patients who have spent their hospital time under observation status get billed directly by the hospital, and will be required to pay for the stay and its care themselves – at a minimum, several thousand dollars. No maximum, except, maybe their retirement money or their house.

Further, Medicare won’t pay for a nursing home stay if the patient hasn’t spent three consecutive days in the hospital prior to admission to the nursing home. In that case, the hospital bill will pale in comparison to the cost of the nursing home when the patient hasn’t been fully “admitted.”

Now, here’s the scary part. For many patients, the hospital can make MUCH more money by skipping over Medicare, and charging patients directly. Medicare’s payments are a fraction of what the hospital charges individual patients who don’t have Medicare. So the hospital doesn’t want to make it easy for Medicare to be the payer because it will make much more money when it bills YOU. The hospital has NO incentive to help you understand any of this, and it makes more money when you stay under observation.

But wait! There’s more!

Once you’ve confirmed the patient has been formally admitted, you have to stay vigilant that the patient’s status doesn’t get changed to observation. Who can change it? Hospital administrators who can check your credit (yes, really) and decide they would rather bill you than bill Medicare. They can decide, without telling you, to change you to observation status, even after you’ve been there for a few days.

So that’s that’s the key – making sure that when you or a loved one goes to the hospital, you are formally admitted to the hospital and that your status remains “admitted”. Whether you arrive by ambulance to the Emergency Room, or you know weeks in advance that you’ll be there for a procedure or a test, you need to make sure cross the admissions “T”s and dot the admissions “I”s to be sure your stay is not considered to be observation.

How do you make sure your status is admitted? How do make sure it doesn’t get changed? Who do you ask? Where can you find the right person to ask? Exactly how do you go about protecting yourself from observation status and hospital profit policies?

If you are the patient, it would be almost impossible to stay effectively vigilant. If you are the caregiver, you’re loathe to leave your patient’s bedside to try to track it down. So it’s easier said than done, right?

Which is why (I know – you saw this coming…) you need an independent advocate to help you. An independent advocate is – yes – independent of the hospital. They have no profit motive for your hospital stay. They aren’t beholden to the hospital or to Medicare. They just want to be sure you’re protected from hospital bills you don’t expect while you get the care you need and deserve.

Your independent advocate knows the questions to ask, knows who to ask, and knows how to make the adjustments that need to be made to be sure you get the care you need, paid the way it should be.

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Comments

Medicare DOES pay for observation status. When you are admitted to the hospital, Medicare Part A pays and the patient’s coinsurance is a flat fee of $1,316 covering the first 60 days. If you are on observation status, Part B pays 80% of Medicare’s preset rate and the patient pays 20%. The hospital cannot bill the patient until Medicare has approved the hospital’s claim. The hospital bills Medicare first for the 80%. Then, after Medicare bills the hospital, they “directly” bill the patient for the remaining 20%.

If you are admitted to the hospital and stay for three days and then discharged to a a skilled nursing facility (SNF), Medicare has coverage for the SNF. But you are not eligible for SNF coverage if you spend the same amount of time in the hospital under observation status. This is where most of the financial damage is done.

Personally I am covered by Original Medicare and, within it’s limitations, I think it is great.

With Original Medicare I never need to get a referral. I can see and doctor of go to any hospital anywhere in the country so long as they accept Medicare. And every teaching hospital accepts Medicare because Medicare funds residency programs.

Most important Medicare there are no pre-approvals required by Original Medicare for diagnostic tests or medical procedures. When you are seriously ill, the delays and problems incurred in getting preapprovals can be fatal. With Original Medicare, if you get a test because the doctor says Medicare covers it, and Medicare refuses the claim on down the line, Medicare prohibits the doctor from billing the patient.

As far as I know nationwide access to providers with no pre-approval requirements are not offered by commercial insurance (except for no referrals) or Medicare Advantage Plans run by private insurers.

Many people do not have original Medicare – they have Medicare Advantage plans. Further – they think they have Medicare when, in fact, their Medicare has been restructured due to their “advantage” plan.

All Medicare is not created equally. If you don’t have an advocate to sort it all out for you, then how can you know?

Please read “42 Code of Federal Regulations 482” in its entirety. It lists the regulations and processes hospitals must follow, as directed by Medicare, in order to treat patients. Once you have read this, feel free to write another article apologizing for blaming hospitals for following Medicare rules. Also feel free to write another article and blame Medicare for coming up with the whole observation and inpatient status scheme. Then, feel free to write another article about all the Quality Improvement Organizations (QIO) that have contracted withe Medicare to manage Medicare policies and make money …….and then make erroneous rules hospitals must follow in order to treat patients. Then you can write another article apologizing to hospitals for having to follow all of these rules just to provide Health Care to patients like you…..who feel free to blame the hospitals for rules that Medicare, Medicaid, and Commercial payers implement.